TWN Info Service on WTO Issues (August03/8)

15 August 2003

Third World Network

Dear friends and colleagues


At a meeting at the WTO on 13 August evening, the US and EC presented their long-awaited joint paper on agriculture modalities.

Initial comments from developing countries was not favourable.  They criticised several aspects of it.  They also said it could not be taken as the framework or basis for the negotiations, as there was already a draft of the Chairman of the agriculture negotiations, and many other countries had put in their proposals in the past three years or more.  The US and EU should not try to hijack the process in the 11th hour with a new paper.

The chief negotiators of the US and EC also held a joint press conference after the meeting.

Below is a TWN report on the reactions to the paper and on the press conference.

Please check our website for previous issues of TWN Info Service.

with best wishes

Martin Khor




US-EC agriculture paper not acceptable as basis for negotiations, say developing countries

Report by Third World Network, Geneva 14 August 2003

The US and EC presented a joint paper on agriculture modalities to a meeting of the heads of delegation (HOD) at the WTO on the evening of Wednesday 13 August.  The US-EC paper drew strong negative responses from several developing countries at an initial discussion on it.

In presenting their paper, the EC and US described it as a framework for “modalities” that narrows the differences between them and other issues such as special and differential treatment could be later built into it through negotiations involving all the members.

Numbers for reducing tariffs, export subsidies and domestic support would  be filled in through negotiations after Cancún. Both stressed that these should be ambitious, the US saying the outcome should be more ambitious than in the Uruguay Round.

But several developing countries rejected the US-EC view that their paper should become the basis for further negotiations, and insisted that the joint paper be only one input out of many that should be considered, and that the Harbinson text remain the focus of discussion.

For instance Kenyan Ambassador Ms Amina Chawahir Mohamed said that discussions have all along taken place on the basis of the Harbinson text and therefore any initiative to move the process forward would have to be built on discussions that have taken place so far, taking account of all views, especially those of developing countries.  It was apprehensive about the 11th hour attempt to resolve issues that have been on tha table for three years.

Many developing countries expressed concerns about the substance of the joint paper.

Indian Ambassador K.M. Chandrasekhar said he was unhappy with the EC-US paper.  It pries open developing countries’ markets whilst allowing both EC and US to wriggle out of obligations to discipline domestic support and export subsidies and credit.  This proposal is not acceptable as India has 680 million peasants to look after and the proposal is against their interests. 

The market access proposal is most difficult.  It has a category on products to be subjected to harmonization approach.  This will have effect of prying open developing countries markets whilst not posing a problem for the US and EU because they have fewer tariff lines with high tariffs whilst developing countries have more tariff lines with higher tariffs.

Brazil’s Ambassador, Luis Felipe de Seixas Correa, said he was upset about the EC-US proposal that “as far as S and D treatment is concerned the rules and disciplines will need to be adjusted for significant net food exporting countries.”   He said this is an attempt by EC and US to create a new category of countries known by the acronym SNFEC.  He questioned what is the legal and institutional basis for having this new classification of exporting countries. 

On market access, he feels it falls short of the level of ambition of the Doha mandate.

China’s Ambassador Sun Zhenyu remarked that many questions remain unanswered.  There is no strong component on S and D.  There is nothing on special products for developing countries. The paper was also weak on export subsidies and export credit.

Kenyan Ambassador Ms.Amina Chawahir Mohamed said that the EC-US text falls short of our expectations and as such we find it difficult to accept it as a basis of our further work.   On domestic support, no specific figures are given for reducing most trade distorting support.  There is no definite commitment for AMS and the main idea seems to be to harmonise the levels of support allowed between the two countries.  The text suggests the blue box will be generally available to all members and this is a step backwards in terms of liberalization.    The paper also does not focus on trade distorting elements of the Green Box measures and the criteria relating to this box.

On market access, Kenya noted the proposed harmonizing tariff reduction formula with a sensitive product category for all members.  This formula does not address Kenya’s concerns, including the special products concept for developing countries.

On export competition, the text negates the Doha mandate to substantially reduce all forms of export subsidies with a view to eliminating them.  On S and D the paper takes only the limited Uruguay Round approach.

She added:  “We are apprehensive about the 11th hour attempt to resolve issues that have been on the table for the last three years.  Ministers at Cancun should be given a realistic and factual report of the current status of negotiations and this report should reflect the divergent views expressed by members so far.  It is on the basis of this factual report that Ministers should give further guidance on negotiations including setting new deadlines for modalities and submission of schedule of commitments.”

Later, at a joint US-EC press conference, US agriculture chief negotiator Allen Johnson and EC Ambassador Peter Carl, portrayed their paper as an exercise of leadership to catalyse the agriculture and overall negotiations.  Johnson said both had “passed the test” and Carl called the proposal a framework representing a breakthrough in resolving problems between the two.  Carl hoped by the end of next week there would be a text acceptable to all members.

The US and EC diplomats evaded requests from the media to fill in details that would give more meaning to their proposal, such as the amounts of different domestic subsidies that were projected in future, and the intended ratio of imports that countries would be allowed to allocate between the linear cut, harmonization formula and zero tariffs approaches.

It became clear that the paper was drawn up by the US and EC only to suit their own interests and to narrow their differences in a manner acceptable to each of them.  The interests of developing countries did not figure.

The coming together of the positions of the two was portrayed by Carl at the media conference as follows.  He said that on export competition there was a breakthrough “parallelism” with EU committing to phase out export subsidy in certain products and reduce the rest whilst the US committing on  export credit.  On domestic subsidy there is a common framework which leads to reduction in trade distorting support.  On market access, “we shifted to each other” with EU accepting some of its tariffs would be subjected to harmonization and US agreeing to some products being under Uruguay Round formula.

To a question on what the proposed category “net food exporting countries” means and which countries were referred to, Carl said it is not reasonable to treat developing countries that are world powers in export capacity the same way as food importing countries.  As to who they are, he would not name the countries but said “you know an elephant when you see one.”

To a question why “special products” concept was left out, Carl said this fitted into Harbinson’s approach to suit countries like India.  The EC and US did not discuss it because “we were working out solutions for ourselves.”  It was now up to developing countries to ask what they want in the negotiations.

He added the EC and US did not address the Green Box subsidies as they did not disagree on this.

Allen Johnson kept stressing that what both wanted was to “move from more trade distorting to less trade distorting to non trade distorting” domestic support, and that this had now been “captured” in their in the paper.  

A journalist asked Carl why the issues of geographical indications and non trade concerns had not been addressed in the paper when the EU had all along insisted that without a solution to these issues it could noit accept other areas?  Carl simply replied that it would take too long to go into those isues.

Another journalist asked the EC and US to each explain what would be the level of their overall domestic subsidies after the exercise, and would it really go down, or would their proposal simply shift the subsidies from one box to another without really reducing production and exports.  He asked whether the US and EC expected their agricultural output to increase, decrease or be maintained, if their proposed modalities were implemented.  On market access, what would be the ratio of products to be allocated between the three categories (linear cut, harmonizing and zero tariffs)?

Johnson denied there would be merely a shifting of boxes with no effect.  He said the aim was to move from trade distorting to non distorting and said through the Green Box subsidy on conservation, many acres would be taken out of production.  Both he and Carl said there were no figures now for example on the ratios of products in the three categories. But it is up to the negotiations to fill in the figures.

They did not answer the questions on what their total domestic subsidies would be like or what their production levels were projected to be, under the assumptions of their proposals.